ARM 26 June 2013 Andrew Dearden

ARM

26 June 2013Andrew Dearden

Treasurers Report toAnnual Representative Meeting

Summary slide

• Altogether a very satisfactory year operationally

• Continued rise in Membership numbers, to over 152,000

• Another strong year for the BMJ Group

• Pensions Industrial action added significant one-off cost

• Further significant contribution to staff DB pension scheme

• Balance Sheet remains strong

Membership

152,415

Financial Performance(Management Accounts)

Statutory Accounts

MemberServices

Rental& Events

BMJprofits

Pension Recovery

Taxation

2012 2011 Varianceresults results to 2011

£m £m £m

Member Services: Income 44.9 42.8 2.1 F

Expenditure (48.3) (46.5) 1.8 U

Like-for-like Member Deficit (3.4) (3.7) 0.3 F

One-off items (net) (1.7) (1.6) 0.1 U Reported Member Deficit (5.1) (5.3)

Contributions from: Events 0.3 (0.5) 0.8 F Property 2.8 2.6 0.2 F BMJ 11.5 10.1 1.4 F

Operating Surplus/(Deficit) 9.5 6.9 2.6 F

Pensions recovery plan (29.5) (4.5) 25.0 U

Other (net) 0.2 0.5

Taxation (0.9) (2.7) 1.8 F

Total Surplus/(Deficit) (20.7) 0.2 20.9 U

One-offs (eg .IA)

Financial Performance Highlights(Management Accounts)

Member Services had a strong year on the back of the continued growth in membership

MS operating costs are under good control

Industrial Action issues added significant one-off cost

Reported (and like-for-like) MS Deficit have improved

Income from Property and Events both increased, helped by the ‘Olympic effect’

BMJ had another very strong year, strong rises in both Revenues and Profits

Total Operating Surplus shows good improvement

Contributed a further £29.5m into staff FS pension scheme

Total Group Deficit was £20.7m

Operating Surplus/(Deficit) by major business area

Member Services Deficit per Member

£m

[NB: note that one-off gains and losses have been eliminated to show true like-for-like operational performance]

BMJPG

2012 2011£m £m

Revenue 71.7 67.1

Expenditure (52.3) (50.9)

Trading Profit 19.4 16.2 Partners profit share (5.1) (4.8)Project expenditure (4.3) (3.3)BNF 1.3 1.9 Interest 0.1 0.1

Operating Profit 11.4 10.1

Goodwill (3.8) (4.0)Pension contributions/Other (10.0) (2.6)Dividend payments (to BMA) 0.0 0.0

Taxation (0.1) (1.8)

(2.5) 1.7

Management accounts format

Balance Sheet summary and history(Statutory consolidated format)

2012 2011 2010 2009 2008 2007£m £m £m £m £m £m

Assets 22.7 25.3 18.4 19.9 21.4 16.4

Investments 86.0 71.8 80.6 93.8 89.5 123.6

108.7 97.2 99.0 113.6 110.9 140.0

Stock/Debtors 19.6 18.3 20.6 13.3 15.8 13.9

Deposits and Cash 18.4 43.7 38.0 38.1 19.9 18.6

146.8 159.2 157.6 165.1 146.6 172.5

Deferred revenue/Creditors (47.8) (43.8) (38.8) (36.2) (35.1) (37.7)

FR17 Pension Scheme Surplus/(Deficit) 3.9 (22.7) (10.2) (44.7) (31.2) (2.9)

Net Assets 102.9 92.6 108.6 84.2 80.3 131.9

Accumulated Funds/Reserves 102.9 92.6 108.6 84.2 80.3 131.9

Investments and Deposits£m

MarketReturns (£14m)

Reduction in Deposits (£26m)

Simple Trend

PredictedYear-end total

Key Financial Risks

• Staff DB Pension scheme • Membership decline

• VAT recovery rate change

• Let up in growth and/or profitability of BMJ

Summary

Sound financial performance, underpinned by continued membership growth

Venue Hire had a strong year, assisted by London Olympics

Continued good control of costs and staffing levels

The Pensions campaign added significant additional cost during the year

Another strong performance from BMJ, now contributing around £1m per month

A significant Funding deficit remains within staff FS Pension Scheme….

….and led to the crystallisation of £25m Deed of Charge obligation during 2012

Investment reserves fell once again as a consequence

Membership Subscriptions

Motion by TREASURER

That the standard rate of subscription be increased by 2% with effect from 1 October 2013

Membership Subscriptions Current Proposed

STANDARD RATE 434 443CONCESSIONARY RATES:Member in 1st year after qualification 111 113Member in 2nd, 3rd or 4th year after qualification 218 222Member in 5th, 6th or 7th year after qualification 323 329Member resident in Channel Islands/Isle of Man 381 389Armed Forces within UK 381 389Overseas member resident outside the UK 270 275Dental surgeons 270 275Salary Link A 160 163Salary Link B 218 222Spouse/partner of member 218 222Permanently retired from medical practice 160 163Medical Student – Fresher NIL NILMedical Student – 1st, 2nd, 3rd year 35 36Medical Student – all others 41 42Medical Missionary/Voluntary Worker NIL NIL

Member for more than 50 years NIL NILNote: terms and conditions apply

£

Increase+£9

+£2+£4+£6+£8+£8+£5+£5+£3+£4+£4+£3

-+£1+£1

--

Membership Subscriptions

Motion by TREASURER

That the standard rate of subscription be increased by 2% with effect from 1 October 2013

Appendices

Statutory Accounts

2012 2011 Varianceresults results to 2011

£m £m £m

Income Membership 43.3 41.3 2.0 F

Publishing 73.0 69.0 4.0 F

Other 4.6 3.1 1.5 F 120.9 113.4 7.5 F

Expenditure (116.2) (110.5) 5.7 U

4.7 2.9 1.8 F

BMJ 11.5 10.1 1.4 F

Other items (net) 2.7 3.9 1.2 U

7.4 6.7 0.7 F

Taxation (3.2) (3.1) 0.1 U

Surplus/(Deficit) 4.2 3.6 0.6 F

Return to Financial Summary

Full Reconciliation next slide

Appendix I

Appendix II

Management to Statutory accounts reconciliation - year ended 31 Dec

2012 2011(Deficit) / Surplus per December 2012 management a/cs (20.7) 0.2

Add back: management accounts tax 0.9 3.7 Add BMJPG & BMA Investments Ltd Dividends 0.0 0.0 Deduct: stats tax figure (3.2) (2.7)Add back: tax relief on pension in mgt accounts 0.0 0.9 BMAI Gain on sale of investments 0.0 0.1 BMJPG - Amoritsation of Goodwill 1.2 1.2 FRS 17 - movement in Tax (1.9) (0.4)FRS 17 - other finance costs 0.4 1.1 FRS 17 - difference in contributions (1.5) (0.8)Other BML - FX, Inter-company (0.1) 0.0 Additional pension contribution 29.5 0.0

Informatica / Medelect - goodwill adjustments (0.4) 0.4

4.2 3.6

Figure per Statutory accounts 4.2 3.6

Return to Financial Summary

Paid to date: 2010 £ 27.0 m 2011 £ 4.5 m 2012 £ 29.5 m

Total to date £ 61.0 m

Paid in 2013 £ 4.5 mScheduled for 2014 -15 £ 10.4 mLikely total to end 2015 £ 75.9 m

Thereafter £ ?

Additional staff pension contributions(Recovery Plan only)

Appendix III